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  • Inform

    China looks to further boost its renewable targets

    • 31 July 2017

    Wind and solar set to make up a quarter of power capacity by 2020

    $700.00

    Summary

    What's included

    • Document

      China looks to further boost its renewable targets

      PDF 1014.26 KB

  • Commodity market report

    No help from the weather: WECC power and renewables short term outlook August 2017

    • 15 September 2017

    Despite the most bullish fundamentals in many years, moderate weather this year has kept prices in check for natural gas.

    $1,350.00

    Summary

    As peak summer cooling season draws to a close 2017's weather continues to dim the prospects of a significant gas price rally despite some of the strongest fundamentals ever. The six month moving average of our supply demand balance has never been tighter in 15 years than it has been in all of 2017. With normal weather Henry Hub prices likely would have traded up toward $4/mmbtu. Instead our degree day index (accounting for both heating and cooling needs) is at the lowest year to date level for those same 15 years. As a result we reduce our near term gas price forecast. Watch for an average Henry Hub price in the low $3/mmbtu range next month but rallying to $3.25/mmbtu for the fourth quarter of this year. Hurricanes Harvey and Irma have had near term impacts on our demand forecast although longer term estimates will need more time to discern. In the immediate near term we reduce average ERCOT Houston loads by seven percent on average through the end of the year. Still we ramp demand back to normal for now by the end of the year based in part on expected stimulus during the recovery relative support from chemicals refining and industrials and total damage to the ERCOT housing stock. Less data is available for Florida from the whole impact of Irma; however September 11 power loads were 47 percent below same time last year on average. For Florida we ramp loads back to normal over the next 12 months although this is subject to change as more information becomes available. Over the past 12 months 8 GW of solar has been added to the grid and 11 GW of wind. The bulk of the wind comes in ERCOT SPP and MISO as wind developers facing growing certainty of the PTC phase out are doubling down on tried and true markets across the Great Plains where wind costs are the lowest and PTC revenues are the highest. While about half the of solar has been installed in the WECC the Southeast has seen the largest concentration of build out in the Eastern Interconnect this past year with about 1.3 GW having been installed in the region. About 700 MW each have been installed in ERCOT the Northeast and the Midcontinent (SPP and MISO). In the WECC for the most part the solar eclipse didn t have a striking impact on operations on August 21. There was a little upward movement in BPA hydro generation and net Interchange (exports). Still very little change in fossil (Coal/Gas/Biomass) generation during the eclipse. This in spite of BPA wind that was minimal during the eclipse versus hitting 4 GW the previous Friday.

    What's included

    • Document

      201708 STO Base Case Delivered Fuel Prices Nominal WECC 8 31 2017.xlsx

      XLSX 123.66 KB

    • Document

      201708 STO Base Case Delivered Fuel Prices Real WECC 8 31 2017.xlsx

      XLSX 123.83 KB

    • Document

      201708 STO Base Case Load Forecast WECC 8 31 2017.xlsx

      XLSX 2.58 MB

    • Document

      201708 STO Base Case Prices Sparks IHR Darks Nominal WECC 8 31 2017.xlsx

      XLSX 1.09 MB

    • Document

      201708 STO Base Case Prices Sparks IHR Darks Real WECC 8 31 2017.xlsx

      XLSX 2.81 MB

    • Document

      201708 STO Base Case Short Term Fundamentals WECC 8 31 2017.xlsx

      XLSX 522.75 KB

    • Document

      No help from the weather: WECC power and renewables short term outlook August 2017

      PDF 357.50 KB

    • Document

      No help from the weather: WECC power and renewables short term outlook August 2017

      ZIP 6.83 MB

  • Insight

    Could renewables be the Majors' next big thing?

    • 04 May 2017

    Wind and solar are poised to reshape energy markets, forcing the oil and gas sector to rethink its future. The Majors are taking stock.

    $1,350.00

    Summary

    What's included

    • Document

      Could renewables be the Majors' next big thing?

      PDF 346.34 KB

    • Document

      Could renewables be the Majors' next big thing?

      ZIP 421.04 KB

    • Document

      Could renewables be the Majors' next big thing.xls

      XLS 162.00 KB

  • Commodity market report

    Change isn't easy when you're a fossil: Europe power and renewables long-term outlook H1 2017

    • 14 August 2017

    Weak demand and growth in renewable supply has placed substantial pressure on the role and economics of fossil-fuel generators.

    $5,400.00

    Summary

    Energy transition remains on course in the power sector The European Union s commitment to its climate energy objectives continues to drive far reaching changes in energy markets nowhere is the influence of this transition seen as strongly as it is in the power sector. But the pace at which change is occurring in power has become a substantial test of both commercial market arrangements and the physical capabilities of infrastructure. Weak electricity demand and growth in renewable power supply has placed substantial pressure on the role and economics of conventional generators particularly those burning fossil fuels such as gas and coal. The rapidly changing characteristics of supply and significant pressure on the traditional business model of utilities have combined with the conflicting demands of national regional and corporate priorities for many the European power sector has become a very challenging place in which to operate. Low carbon growth sustainably delivered? As wind and solar PV technology costs have fallen and the burden of environmental levies on consumers has become a subject of increasing public (and political) concern the availability of financial support for renewables has altered substantially. Developments in renewable subsidy arrangements including changes in Germany Italy and the UK have demonstrated a more determined commitment to reducing the costs of low carbon power and increasing the integration of subsidised technologies into wholesale markets. EU wide state aid rules require all new or overhauled incentives to be market orientated and cost effective signalling the end of over generous and inflexible payments. New incentive arrangements must feature competitive bidding processes exposure to wholesale markets and market balancing obligations. Changes to subsidies and the costs of maturing renewable technologies offshore wind has been responsible for the most recent high profile cost reductions will shape the development of low carbon power supply wholesale price formation and the role of conventional generators in Europe. Over time many of the distinctions between the market treatment of renewables and other sources such as priority grid access and dispatch will be removed. Wind solar and thermal renewables will continue expanding their role in European electricity supply although rates of growth will be lower than those seen in previous years. Renewable power supply by source and market share (EU 28) Decarbonisation is difficult for fossil fuels Investment in conventional flexible supply has become increasingly difficult (and rare) in much of Europe while the retirement of unprofitable plants is weakening system margins. As Europe s power supply mix develops and the role of gas and coal generators continues to change the commercial frameworks of markets is transforming. Wholesale power prices are offering less value to generators seeking to cover the variable costs of traditional thermal plants with even the most efficient facilities finding it more difficult to achieve an acceptable return on invested capital. These conditions have contributed to an upsurge in the mothballing and retirement of fossil fuel fired plants shifting corporate strategies and the cancellation of many (almost all) plans for new coal and gas fired developments. With regional controls on atmospheric pollutants and national policy initiatives such as Germany s energy transition and moves by the French government to restrict output from its nuclear fleet also influencing the generation mix the maintenance of adequate flexible supply capability is a major concern for governments and regulators. As large volumes of production from renewables make the management of power systems more challenging moves to strengthen existing or introduce new arrangements to ensure the adequate reward of dispatchable generators have become widespread. Capacity reward arrangements will increasingly allow operators to realise the value of their flexible generation (and also demand and/or storage based services) resulting in a greater emphasis on the flexibility and capability of assets ahead of their overall rates of utilisation. A new focus on capacity before output (megawatts as a service) is attracting investors and represents an alternative revenue stream for many existing coal and gas fired generators. European power supply by source Note: Hydro generation from conventional sources only excludes pumped storage production Coal s bad run continues During 2016 a number of market specific factors weighed on coal's contribution to supply particularly as seaborne thermal coal prices strengthened in the second half of the year. UK coal generators were out competed by gas fired resulting in unprecedented periods of zero coal fired supply on the system. In Spain low demand and high hydro output (a position reversed in 2017) pushed coal out of the market while in France competition from gas led to a drop in coal fired power supply to half of 2015 levels. Only German coal generators saw some upside resulting from lower production from nuclear but offset by strong renewable output and growth in gas based CHP generation. Overall coal fired generation in the EU fell by nearly 10% last year. Older coal fired units already constrained by measures such as the Industrial Emissions Directive (IED) and the growing competitiveness of gas will continue to face pressure from the efforts of national governments to reduce carbon emissions. The UK intends phase out all coal fired power by 2025 and Germany has introduced a lignite reserve to remove its most polluting plants from the wholesale market. The combined market share of hard coal and lignite fired generation will fall from its current 22% to 17% in 2020 and just 12% by 2035. Across the EU we forecast coal generation to fall to 353 TWh by 2035 down from 739 TWh in 2016. Gas makes a comeback but the story changes As coal declines gas' contribution to supply in the EU will rise from 606 TWh in 2016 to a peak of 760 TWh in 2024 accounting for 23% of generation at that time. But then the story changes and gas fired supply will begin to fall as competition from renewables intensifies and power demand growth continues to be weak. By 2035 gas fired production will have fallen back by some 10% from its mid 2020s level. Declining production from nuclear and coal will lend some support to the use of gas towards the end of the outlook. The ability of nuclear to remain one of Europe s foremost sources of power looks increasingly uncertain. While the UK s decision to go ahead with the 3.6 GW Hinkley Point C project has provided a much needed but also widely criticised boost to Europe's nuclear industry policies to phase out or limit the contribution of the source impact on a far greater volume of potential production. We expect power supply from nuclear to fall by over 20% between 2016 and 2035.

    What's included

    • Document

      Europe Power H1 17.xls

      XLS 2.33 MB

    • Document

      Change isn't easy when you're a fossil: Europe power and renewables long-term outlook H1 2017

      PDF 495.92 KB

    • Document

      Change isn't easy when you're a fossil: Europe power and renewables long-term outlook H1 2017

      ZIP 1.05 MB

    • Document

      Executive summary

      PDF 116.27 KB

    • Document

      Demand

      PDF 118.88 KB

    • Document

      Renewables

      PDF 155.89 KB

    • Document

      Supply

      PDF 92.02 KB

    • Document

      Supply-demand balances

      PDF 103.27 KB

    • Document

      Prices

      PDF 147.54 KB

    • Document

      Risks and uncertainties

      PDF 86.20 KB

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